1998 (12) TMI 582 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the assessment order levying tax on poultry feed turnover.
2. Applicability of G.O. Ms. No. 1055, Revenue, dated October 17, 1994.
3. Discrimination under Articles 301 to 304 of the Constitution of India.
4. Interpretation of Supreme Court judgments in similar cases.
5. Relief sought by the petitioner.

Detailed Analysis:

1. Validity of the Assessment Order:
The petitioner, a private limited company engaged in the business of poultry feed, challenged the assessment order dated March 23, 1998, which levied a tax of Rs. 3,28,832 on a turnover of Rs. 1,09,61,060. The assessment was based on the sale of poultry feed made from ingredients purchased outside the State, which had not suffered tax under the Andhra Pradesh General Sales Tax Act, 1957.

2. Applicability of G.O. Ms. No. 1055, Revenue, dated October 17, 1994:
The Government of Andhra Pradesh issued G.O. Ms. No. 1055, exempting tax on the sale of poultry feed manufactured out of ingredients that were either subject to tax or exempt from tax under the Act. The petitioner argued that this exemption should apply to poultry feed manufactured from ingredients imported from other States, which had not suffered tax under the Act. The final assessment order for 1994-95 subjected the turnover to tax at 4%, leading to the writ petition questioning the interpretation of the G.O.

3. Discrimination under Articles 301 to 304 of the Constitution of India:
The petitioner contended that the Supreme Court in Indian Cements Ltd. v. State of Andhra Pradesh held that a similar G.O. was violative of Articles 301 to 304, and the same principle should apply here. The petitioner argued that there should be no discrimination between poultry feed manufactured from taxed ingredients within the State and those from untaxed ingredients imported from other States. The special counsel for the Revenue countered that the issue was covered by the Supreme Court judgment in Video Electronics Pvt. Ltd. v. State of Punjab, which upheld the Government's power to exempt certain goods from tax.

4. Interpretation of Supreme Court Judgments:
The court examined several Supreme Court judgments:
- Indian Cement Ltd. Case: Held that reduced tax rates for locally manufactured cement products were violative of Articles 301 to 304.
- Video Electronics Case: Upheld the validity of exemption notifications for a limited period with specific conditions, distinguishing it from blanket exemptions.
- Shree Mahavir Oil Mills Case: Held that unconditional exemptions for local goods were discriminatory and violative of Article 304(a).

The court concluded that the impugned notification in the present case was a blanket exemption without valid reasons, similar to the Indian Cement and Shree Mahavir Oil Mills cases, and thus, discriminatory.

5. Relief Sought by the Petitioner:
The petitioner did not seek to quash the notification but to extend its benefits to poultry feed manufactured from ingredients imported from other States. The court referred to Anand Commercial Agencies v. Commercial Tax Officer, where it was held that imported goods should not be taxed at a higher rate than local goods. Following this principle, the court directed the respondents to extend the benefits of G.O. Ms. No. 1055 to the poultry feed manufactured from imported ingredients.

Conclusion:
The court allowed the special appeals and writ petition, directing the respondents to extend the benefits of the impugned notification to the petitioner and issued a writ of mandamus accordingly. The petitioner was awarded costs, and the appeals and petition were allowed.